India’s largest oil and gas explorer, Oil and Natural Gas Corporation (ONGC), is positioning natural gas as the primary driver of its future revenue growth. This strategic shift comes amid declining crude oil output and a favourable domestic pricing regime for newer gas discoveries.
ONGC Chairman and CEO Arun Kumar Singh highlighted during a recent investor call that the company now produces more natural gas than crude oil. He emphasised that new well gas, extracted from freshly drilled wells, is set to play an increasingly significant role in the company’s financial performance.
In FY26, new well gas accounted for 17 per cent of ONGC’s gas production but contributed a disproportionately higher 21 per cent to revenue from its nomination gas portfolio. The company earned ₹6,678 crore from this segment, delivering an additional ₹1,223 crore compared to gas sold under the older Administered Price Mechanism (APM).
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This premium pricing—pegged at 12 per cent of the monthly average Indian crude basket price versus 10 per cent for legacy APM gas—has made new well gas a lucrative stream. Singh noted that India offers one of the highest realisations globally for such gas, providing a strong incentive for accelerated development.
The company expects the share of new well gas to rise to 25 per cent of total gas production in FY27, with further increases anticipated in subsequent years.
ONGC is aggressively pursuing development projects to sustain and grow its gas output. Projects worth ₹33,075 crore are currently underway in Western Offshore blocks—the highest investment level in recent times. These initiatives aim to counter natural decline in mature fields and boost overall hydrocarbon production.
Despite the positive outlook on natural gas, ONGC’s overall production numbers for FY26 showed marginal declines. Standalone crude oil production fell to 18.355 million tonnes from 18.558 million tonnes in FY25. Similarly, standalone natural gas production dipped to 19.533 billion cubic metres (BCM) from 19.654 BCM the previous year.
The company’s consolidated net profit, however, jumped 53 per cent year-on-year to ₹13,678 crore in the fourth quarter of FY26, reflecting better realisations and operational efficiencies.
ONGC’s renewed emphasis on natural gas aligns with India’s broader energy transition goals. While the country continues to rely on imported crude oil, domestic gas production is being prioritised to reduce dependence on LNG imports and support cleaner energy needs across power, fertiliser, and city gas sectors.
Industry analysts believe ONGC’s strategy could help stabilise its revenue profile even as global oil markets remain volatile. The company’s ability to monetise new discoveries quickly through the marketing freedom and premium pricing policies introduced by the government will be crucial.
As ONGC ramps up its capital expenditure in high-potential offshore areas, the coming years are expected to see a gradual shift in its production mix towards natural gas. This transition not only promises higher revenue visibility but also positions the national oil major as a key player in India’s journey towards energy security and sustainability.
With several development projects in advanced stages, ONGC aims to arrest production decline and eventually reverse it. The success of these initiatives will determine how effectively the company can leverage its vast acreage and technical expertise in the evolving energy landscape.
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